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European Equities Offer U.S. Investors a Better Opportunity

5/28/15 12:29 PM EDT
European equities offer a better opportunity for U.S. investors, according to one expert. Burns McKinney, Portfolio Manager of NFJ investments says European stocks are trading at an historic discount to U.S. stocks, and you can still get 2.5% to 3% dividend yields. But if you look at European stocks compared to other markets, they probably have gotten a bit ahead of themselves compared to developed Asia or the emerging markets. He also thinks the U.S. market has gotten a little pricey. His favorite sectors right now are financial services and energy. Burns notes that in the financial space, valuations are still discounted and a lot of the banks and financial services firms have cleaned up their balance sheets. A few financial stocks he's been buying lately include Nordea Bank out of Stockholm, Sweden. He says Nordea is trading at about twelve times earnings and has a dividend yield of over 5%. He also likes Zurich insurance, which is trading just above its book value and has a dividend yield that is higher than other European insurers. In the energy sector, he likes Royal Dutch Shell, which trades at fourteen times earnings, compared to twenty times earnings for Exxon Mobil (XOM). The stock also offers a nearly 6% dividend yield and he's bullish on its recent acquisition of BG Group.
Stocks in this video: XOM
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